Maximise super within caps
Superannuation remains as one of the central building block for year-end tax planning. If used properly, it can generate tax savings over short to long term periods. However, taxpayers should also be mindful of the contribution caps that comes in with a penalty if they over-contribute!
Concessional contributions comprise of salary-sacrificed and super guarantee contributions. If you are self-employed, your contributions form part of the concessional contributions where it is also tax-deductible. Contributions can be planned in advance and should be implemented throughout the year, especially if you intend to contribute up to the concessional cap. In a nutshell, contributions that does not reach the super fund by June 30 WILL count towards next year’s contribution.
Concessional Contribution
- Employer Contributions
- Salary Sacrifice Super
- Personal Contributions claimed as tax deduction (less than 10% of your assessable income is from being an employee)
Non-Concessional Contribution
- Personal contributions NOT claimed as tax deduction as more than 10% of assessable income is from being an employee.
- Spouse Contribution
- Excess contributions over cap threshold
- Excess contributions over a business taxpayer’s CGT cap amount
- Transfers from foreign superannuation funds
| Concessional Cap 2013-14 | Non-Concessional Cap 2013-14 | ||
|---|---|---|---|
| Age | Annual Cap | Type | Cap |
| >59 years | $35,000 | 3 year range & Aged under 65 years | $450,000 |
| All others | $25,000 | Standard Annual Cap | $150,000 |
Super co-contributions
For every dollar of contribution that you put into your super, the government will match AUD 50 cents to it until it hits the maximum cap of $500. This is a good way of securing more dollars for your superannuation.
| 2013-14 | 2012-13 | |
|---|---|---|
| Maximum government co-contribution | $500 | $500 |
| Matching Rate | 50% | 50% |
| Low Income Threshold | $33,516 | $31,920 |
| Income Threshold Cut-off | $48,517 | $46,920 |
Defer Income and Accelerate Expenses
This is one of the most fundamental technique that taxpayers can employ for year-ed tax planning. Some of the strategies that you may employ may include (but not limited) to the following:
- Defer taxable asset sales to the following financial year
- Timing the issuing of your tax invoices to defer income to the following year
- Prepaying up to 12 months of deductible interest on loans and/or insurance premiums
- Prepayment of rent provided it covers a period of 12 months or less
Deductions
Depreciation
Immediate deductions can be claimed for depreciating assets that cost under $300. This can be claimed to the extent in which the asset is used to earn salary, wages or rent.
There are four methods in which taxpayers can claim deductions for work-related car expenses:
- Cents per km
- 12% of original value
- One-third of actual expenses
- Log Book Method
Do you use your car for work but don’t have a logbook? Don’t stress! It may still be possible for you to claim work- related car expenses on your income tax return.
How does it work?
You can reduce your tax payable or increase your refund using the one-third of actual expense method. This method allows you to claim one-third for each car expense you incur. The eligible car expenses do not include capital costs such as the initial purchase of the car or improvements to it such as replacing an engine.
Please remember you can only claim these expenses when they are work related – i.e. used for work purposes to earn an income. You must keep written evidence for all of your expenses except fuel and oil which your Etax Local Accountant can work out for you based on your odometer records.
What you need to know?
Use this method if you used your car to drive more than 5,000 business kilometres in the tax year or if you only used the car for a proportion of the tax year, simply divide 365 by the number of days you owned the car and multiply that answer by your kilometres travelled. The result is the amount of kilometres you would have travelled in a full year. If it is more than 5,000 then you can still use this method. If your answer is less than 5,000, or you did not travel more than 5,000 business kilometres in the year, you should use the cents per kilometre method or the logbook method.
Is this method for me?
We don’t usually recommend using this method as you can generally gain a better result from the other methods, especially the logbook method. However if you do not wish to keep a logbook, as long as you have written evidence for your expenses you can use this method to reduce your tax payable.
Rental Property Deductions
If you are a property investor, there are quite a few expenses that you could claim in your individual tax return.
- Immediate Deductions
- Declining value of depreciable assets
- Capital Works Deductions – Structural Improvements
